SFB Newsletter #22

Hey 👋

If you get aroused at the thought of business growth you’ll love this edition of the newsletter.

Today we’ll cover ‘The Lifetime Profit Value of Your Client Formula,’ which just might be the single most important formula to judge and plan for the pending growth of your company.

Problem being: Almost all business owners I speak to don’t know their LTV. Perhaps you’ve heard about it in passing - but most people don’t take the time to actually work it out.

A great mentor once told me, "Business is Math and Psychology...”

In this edition of the newsletter, we’ll talk about the Math.

Even better - it’s 3rd grade math - The most basic of calculations.

You’ll know I’ve had a lot of great mentors.

Early on I clued into the fact that most people would be prepared to spend $50K on a university degree to learn from average people about average things…

You see, when I was 21, I had one conversion with a mentor that was more valuable than my whole education up until that point.

On that day I discovered that there is something seriously broken in the education system, and I didn’t just talk about it.

That week I went into my university and told them I quit, I had one subject left to go. I intentionally flew in the face of every single person around me. My parents and grandparents were mortified. But I knew I was onto something.

Something else I discovered is that most people want a safety net - they wait until all of ‘their ducks are in a row’ to take any meaningful action in their lives…

I’ve not seen it work consistently.

When you are making a big life change or making a new commitment to your business: Burn the boats. 

Instead of sitting around intellectually masturbating about what other people thought about my career - I found people who could help me. I read the books, went to seminars, and threw myself into finding people who had life and business wisdom and I learnt everything I could.

Anyways here’s some data - according to Forbes Magazine...

50% of small businesses fail within the first 18 months, and 95% of small businesses fail within the first 10 Years.

I believe these numbers are founded by the relationship or lack thereof between the business owners and the LTV.

And the good news - there’s only 8 numbers that form it. Ignore them at your peril.

It becomes important to mention how to get the most out of your time here.

By simply reading this newsletter you may consume some of the information, with some hope to implement it into the future...

However if you download and use the resources I give you, you will have a much broader perspective by which to apply it to your business and this will be worth thousands of dollars in increased income for you in the next few months if you truly apply yourself.

But you do have to take some action. Don’t be a fly on the wall.

Back to it.

The Average Lifetime Profit Value of a Client Calculation is a mathematical system that focuses on real time numbers: It’s looking through the windshield with clarity as to what is happening now and what to expect in the future.

In a basic way it says: ‘If you were to bring in one client to your business tomorrow, on average how much Profit would that make you?’

This one figure and how to increase it is by far the most profound understanding of how to grow your business, and therefore how to increase your personal wealth.

It also unlocks your marketing in a new and profound way that most people miss.

This system, will drill down to the ONLY stats you need to measure and increase to Geometrically Grow Your Business.

And as mentioned the most amazing thing about all this is there are only 8 of these Profit Maximisers...

And here’s where it gets really exciting; If you can improve these metrics by 10% each you will be introduced to what Albert Einstein called ‘the 8th wonder of the World.’

The Exponential Power of Compound Interest.

Here are the 8 Metrics You Should Be Intensely Focussed On...

1. Number of New Leads
2. Sales Closing Percentages On These Leads %
3. Sales / Year
4. Average $ Sale (AOV)
5. Profit Margins %
6. Average Purchases Per Year
7. Number of Referrals / Client / Year
8. Average Years Client Stays

To work out your LTPV = Average Order Value (AOV) x Net Profit (%) x Frequency of Purchase (F) x (1 + The Referral Ratio) x Number of Years They Stay (X)

Again I want to mention here this is 3rd grade math.

Grab a pen and paper and work it out.

Then to work out your profits (x) times this by the number of new front end sales (S)

Every single thing I share here in the newsletter is designed to shift these 8 numbers. As it currently stands I have over 150 strategies that I’ve designed, tested and proven to shift these 8 numbers.

You will see in a moment, by making a few simple shifts you can easily double the net profits in your business.

And this is what the Lifetime Value Calculation is all about... Finding and applying the appropriate vectors of leverage, ‘the small hinges to shift the big doors.’

Too many businesses get caught up in the accounting... ‘Facts and figures’ when in reality accounting is closer to creative writing than the pure and simple math in this book.

When you only focus on the accounting numbers in your business - you’re trying to drive a windy mountain road at top speed whilst only being able to look out the rear view mirror.

It’s crazy, and very “un-entreprenerial.”

WHAT WOULD HAPPEN IF YOU INCREASED THESE 8 METRICS BY 10% IN YOUR BUSINESS?

Let’s jump into the hypothetical example below to further illustrate these powers for you;

In this Hypothetical Example what I’ve done here is simply increase the 8 key profit maximisers in the business by 10%…

I’ve taken 100 monthly leads to 110 for example… And then run that same formula for the other 7 profit activators.

Here’s the numbers…

I’ve then run the numbers to work out the LTV’s and multiplied those by the number of yearly sales.

Now you might expect the increase in profits to be somewhere in the range of 10-20%…

Wrong - dead wrong!

As a result the profits from these sales accrued from one year in the business have risen from $484,542 to $944,235

Proving: If you improve 8 metrics in your business by 10% you ‘almost’ double the net profits in your business.

Seneca once said, “When a ship doesn’t know which harbour it is aiming, no wind is the right wind,” and now that you know where we’re heading together; you just have to add 10% to your key metrics…

Things become pretty simple don’t they?

No matter what business you are in, no matter what you sell, who you sell it to, or where you want to sell it… The Average Lifetime Profit Calculation applies to you.

It’s a law of business growth.

Now - If you want to apply these systems to your business and get access to over 150 different strategies to shift these numbers you should join ‘The Systems for Business Mastermind’

I’ve set up a brand new group of business owners who are all looking to scale their businesses and their profits.

We’ve got a great group building - if you’re growth minded, have 5+ hours to invest per week testing new scaling strategies for your business and you want to add at least $100K to your business this year - I’m sure you’d be a good fit.

If you join - I’d be sure you’ll add much more than 10% to each of your numbers. So you could double your NET profits just by being a member.

You’ll get access to Principles (Just like the LTV formula), Strategies and Tactics, we also catch up on mastermind calls and hatch plans together and then we spend our days chatting in the forum about the results, new tests and new hypotheses.

Talk soon,

Ben Slater.